Etsy sellers miffed about wholesale wind-down
Etsy sellers are disappointed by quiet changes the crafts marketplace has made to its wholesale program, designed to enable them to get wares into brick-and-mortar stores, Bloomberg reports. Etsy maintains its "Etsy Wholesale" page, but sellers report it hasn't been updated, according to the report.
Etsy launched the program four years ago, taking a 3.5% commission on wholesale transactions, equal to what it takes on the retail site, but lower than the industry standard of 35%. Sellers operating through Etsy Wholesale were assigned an expert to help them with the wholesale side of their business, which for many is a new enterprise.
The company declined to address the specifics of Bloomberg’s report, but said in an email to Retail Dive that it plans to continue having wholesale options for the Etsy community. "Driving the wholesale buyer to seller connection aligns with our business strategy of focusing on the value of the core Etsy.com marketplace," an Etsy spokesperson told Retail Dive. "We’re currently evaluating the best way to do that and we will update our wholesale community when we have more information."
Since taking over from Chad Dickerson almost a year ago, CEO Josh Silverman has been under pressure to turn the marketplace around. The company began struggling after going public three years ago, as sellers and customers alike complained that larger purveyors were undermining its artisanal focus combined with Amazon's launch of Handmade at Amazon.
Last May, private equity firms TPG Group Holdings Advisors and Dragoneer Investment Group revealed significant stakes in the company, which were purchased "on the belief that they were undervalued." The firms noted in a Securities and Exchange filing that they had "contacted representatives of Etsy to offer to engage in discussions regarding strategic alternatives."
That came after the marketplace retailer replaced Dickerson with Silverman, a response to hedge fund Black-and-White Capital, owner of 2% of Etsy’s shares, which had released two letters highlighting critical issues and necessary steps to address them. Layoffs in May and June last year brought the total planned staff cuts at Etsy this year to 230 positions, or 22% of its workforce.
The company has since turned around, with sales roaring back in the third quarter last year, and more sellers continued to sign up into the fourth quarter. In that period, Etsy's gross merchandise sales (GMS) rose 17.8% to $1 million, representing its first ever billion-dollar quarter, CFO Rachel Glaser told analysts. By the end of that quarter, Etsy had $33.4 million active buyers, up 17%, and more than 1.9 million active sellers, up 11%.
"Growth in both active buyers and active sellers demonstrate that our vibrant two sided marketplace continues to grow at a healthy rate and we're particularly pleased that the total GMS grew even faster than active sellers, signifying an increase in average GMS per seller," she said, according to a transcript from Seeking Alpha. Nearly a third of the company's 2013 seller cohort was still active in 2016, she noted in February.
The spokesperson told Retail Dive that the marketplace is dedicated to providing sellers the best ways to boost sales. "Wholesale sellers rely on Etsy to bring them buyers through visibility on our platform," she said. "Our goal is to continue to enhance that discoverability over the course of 2018 and beyond."
But sellers sound wounded, by Bloomberg's account. The healthy attachment for local merchandise among a certain customer segment has prompted other retailers, notably West Elm, to bring art and other products from local artisans into stores.
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